- 26 Feb
Bad Debt Protection For A Construction Business
The focus on bad debts within the construction sector, and protection against your business suffering from large companies failing has been brought into sharp focus with the recent failure of Carillion. The construction sector conglomerate went into liquidation reportedly owing it's supply chain of contractors around £2 billion. If you have been affected by the collapse there are plenty of offers of support for Carillion contractors available.
Secure Your Company Against Bad Debts
Many companies within the sector now seem to be more concerned with how to secure their company against the effects of another large customer collapsing in the future - with a fear that another large failure could be closer that we would all hope.
The simplest way of protecting your company is to ensure that you have a wide spread of customers, with no concentrations into a single customer. However, the ideal spread of customers is often not the case in practice and we deal with many companies within the sector that have either a single debtor, or a very narrow spread of debtors.
Therefore, protecting against the devastating effect of those customers failing is paramount to business survival, and the risk of those customers failing is a huge contingent risk on the business.
Bad Debt Protection
One of our funding panel, Pulse Cashflow Finance, that work with construction sector businesses were very quick to publicise the fact that none of their customers were affected by the Carillion collapse, the reason being, that all their clients receive bad debt protection (protection against customers failing and owing you money) as a standard feature with their funding packages.
Many of the funders that work with the construction sector offer similar services.The way that bad debt protection (also called non recourse) works is that the funder sets customer credit limits for you. This is the maximum value of sales that can be outstanding to a particular customer such that they are protected in the event of customer failure. The exact terms of the cover may vary between providers, but the bulk of the debt is covered providing it falls within the credit limit that was granted (there may be exclusions such as first loss clauses which work in a similar way to the excess on your car insurance).
The best way of protecting your company against a future loss is to look into the bad debt protection option before it happens - you could reap huge benefits in the future, not to mention the peace of mind that comes from knowing that you don't have to worry about customers failing.
- 13 Feb
Construction Simple From Bibby Financial Services
Bibby Financial Services have launched their new construction sector finance product called "Construction Simple".This product delivers specialist finance for small and medium sized construction sector companies, that want to improve their cash flow. It works by freeing up 70% of the cash that is tied up in your unpaid sales invoices, or uncertified applications for payment.Construction Simple...
- 05 Feb
Bibby Have Offered Additional Support To Companies Hit By The Carillion Collapse
Bibby Financial Services, who offer specialist funding to the construction sector (in addition to funding other sectors), are offering a number of measures to support companies hit by the collapse of Carillion, the UK's second largest construction sector business.The package of measures from Bibby, for companies within the sector, includes:The need for this kind of protection has been made all...
- 16 Jan
Carillion Liquidation Help For Contractors
With the liquidation of Carillion many contractors that supplied the countries 2nd largest construction company will be looking to understand what help they can access as a result of the money that they are owed by this construction giant.The good news is that many companies have pledged support. Some of the major banks have offered up support funds, many alternative finance companies have...
- 11 Oct
Liquidation Of An Electrical Contractor & How To Avoid Similar Problems
An article popped up in my newsfeed about the liquidation of a Hull based electrical contractor that had been long established - it's always sad to hear of a long standing businesses failing. A few of the circumstances that lead to the liquidation stood out to me, as potentially soluble, which I thought worthy of comment, perhaps as advice to others in a similar situation.The article said that...
- 06 Oct
The Benefits Of Construction Finance
If you are a contractor or sub-contractor, providing services to a main contractor within the construction sector, you may have experienced the ongoing cash flow pressures that can come from projects within the sector. Upfront labour and materials costs often need to be paid in advance, before you get paid for the job. Additionally you can have the normal ongoing, day-to-day business costs to...
- 18 Aug
Late Payments Expected In The Construction Sector
Construction companies are bracing themselves for a wave of late payments, as a result of the uncertainty around Brexit and the UK economy.Our recent late payment study found that the construction sector was one of the industry segments expecting to be worst hit as a result of Brexit (Britain leaving the European Union in March 2019). The extended timescale with the proposed exit is an issue in...
- 30 Jul
Construction Financing For Contractors
We are trying to raise awareness of construction financing for contractors which is a little known form of finance available to UK subcontractors in the construction sector. Any help you can give us by sharing our post about this is much appreciated.We researched the need for this type of gap funding. Three quarters of sub-contractors that we polled that raised applications for payment, 85% of...
- 10 Jul
5 Secrets About Getting Construction Finance
The construction sector has been notoriously difficult to finance due to the the many issues that tend to come as part and parcel of working within the sector. These are problems such as stage payments, raising applications for payment instead of invoices, having complicated contracts with main contractors, to mention but a few.There are a number of financiers that are specialists in funding the...
- 25 May
Finance For Construction Company In CVA
Finance for a construction company that's in CVA (creditor's voluntary arrangement)? Most financiers would say "no thank you" but we have partners that can help.It's common when a company has financial problems, or a poor credit history, to just assume that you won't be able to raise any finance from anywhere. Everything these days seems to revolve around having a clean credit history, and a...
- 15 May
Solving A Single Debtor Credit Limit Issue For A Construction Sector Company
We have just been able to help a construction sector company solve a cash flow issue by getting funding against their single debtor. We were able to find them a credit limit that was several times larger than other funders were able to offer.I wrote recently about our success in helping customers with funding limit problems, and this case was a similar example of how we are able to overcome...
- 03 Mar
The Reasons For Non-Payment In The Construction Sector
A recent study by Bibby Financial Services identified the reasons for non-payment in the construction sector.On average the survey found that amongst the construction firms surveyed, they wrote off nearly £51K, over the last 3 years, where customers either failed or were unwilling to pay.Of the 250+ construction subcontractors that were interviewed, 27% said that "late payment" was the biggest...
- 28 Feb
The Pitfalls Of Construction Contracts
Futher to my recent post "Understanding Construction Contracts" I have been reading an interesting piece of research, from Bibby Financial Services, that reveals just how much of a problem contracts can be to subcontractors within the sector.There were a number of pitfalls of construction contracts that were identified in the survey.In addition to affecting your ability to get paid, contractual...
- 03 Feb
Help Understanding Construction Contracts
There are a number of financiers that handle the construction sector and will be able to provide you with finance against applications for payment. The sector is widely subject to contractual terms, and these contracts are normally provided to the subcontractor by the main contractor.However, often contracts are signed without the subcontractor really understanding their obligations, and this...
- 01 Nov
Construction Finance For A New Startup Company
Recently FundInvoice has added a lot of help and information for construction sector businesses that are looking to raise finance. We have just been able to help a new startup company, which is projecting turnover of £500,000 over the next year, within the construction sector.The company operates as a sub-contractor, providing electrical and mechanical engineering services to the main contractor...
- 28 Oct
Finance Against JCT Contracts
At a meeting with one of our construction finance partners recently, they spoke of their ability to provide finance against JCT contracts (the Joint Contracts Tribunal produce standard forms of contract for the construction industry, that can be modified in some cases). It struck me how far the industry has come since I started in factoring back in 1988.Anything contractual was a "no no" back...
- 08 May
Price Of Construction Finance Against Applications For Payment
An example of the pricing for a #construction finance deal has been added to the #FundInvoice site. Pricing will vary depending upon your particular circumstances but it gives you an example of the pricing for a reasonable sized client: Construction Finance Pricing...
- 07 May
Demand For Construction Sector Labour Falls As Costs Rise
An #construction sector article by the London School of Business quotes KPMG and Markit research as showing the lowest demand for workers in the construction sector since May 2015. The article also points out the rise in staffing costs, which will undoubtedly being putting additional pressure on the cash flow of construction companies.Slow payments still plague the construction sector, and our...
- 02 May
Construction Sector Finance Against Applications For Payment
A new video explaining construction finance against applications for payment:...
- 19 Apr
Construction Finance Updated
I have just updated the Construction Finance section of our main site to include case studies, articles and news stories. We will shortly be adding some more examples of costings: Construction Finance...
- 10 Jan
Construction Finance Growing Number Of Funders Available
One of the sectors receiving growing levels of funding from the invoice finance sector is the construction sector. A growing number of invoice finance companies have extended their product ranges to offer construction finance. Many construction businesses don't realise that you can receive finance against applications for payment, including those that are uncertified: Construction Finance...
- 22 Jun
Construction Finance Against Applications For Payment
Many construction sector businesses do not raise invoices for payment, rather they present an application for payment. This can be an issue for many invoice finance companies as can the contractual nature of the construction industry. Construction finance is the alternative.There are now a number of finance houses that handle construction sector businesses, with funding provided against...
- 10 Dec
Alternative Finance For Construction Projects For Construction Companies
We had an interesting meeting with a provider over the last few days who have moved into finance for construction projects in addition to mainstream invoice finance deals. They will provide funding to construction sector businesses either against applications for payment or invoices depending upon the method of operation. This increases the options for clients as this kind of alternative finance...
- 27 Nov
New Article About Construction Project Finance As An Alternative To Bank Loans & Overdrafts
I have just published a new article on the FundInvoice site about Construction Project Finance as an alternative to using bank loans and bank overdrafts to finance construction sector projects. You can read the article here: Construction Project FinanceThis type of finance is very specialist and there are a limited number of construction finance companies that offer such facilities. However it...
- 29 May
New Trade Finance & Construction Finance Pages Added
I have added new pages to the blog, one about Trade Finance and one for Construction Finance - two of the niche commercial finance products that we can help businesses find.Trade Finance - is finance for importers who are importing shipments of goods into the country: Trade FinanceConstruction Finance - is sector specific finance for construction sector businesses: Construction Finance...
- 22 Apr
Deal Completed - Construction Finance For A Group Of Companies
We were recently able to assist a large group of construction sector companies that were finding their existing bank overdraft restrictive and they needed greater levels of working capital in order to grow and expand their construction sector business.We found them a construction finance facility that was able to release a further £250,000 of funding for the group in order to fund their growth...
- 25 Mar
64% Of Construction Sector Businesses Would Benefit From Funding Against Uncertified Applications For Payment
Just noticed that I hadn't published this interesting result from our #constructionfinance research survey. 64% of Construction sector businesses say that they would benefit from receiving funding against Applications For Payment that have not yet been approved - I have previously expressed that as a percentage of just those that raise applications for payment (85%) but not as a percentage of the...